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Highly Diversified Growth Portfolio with Moderate Risk and Notable Historical Performance

Report created on Nov 23, 2024

Risk profile Info

5/7
Growth
Less risk More risk

Diversification profile Info

5/5
Highly Diversified
Less diversification More diversification
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Positions

The portfolio is highly diversified, consisting of five ETFs with a focus on growth. It includes a significant allocation to the Vanguard S&P 500 ETF (50%) and a mix of international and small-cap value stocks, gold, and technology. This composition suggests a strategic approach to capturing broad market growth while mitigating risk through diversification. It balances exposure to various markets and sectors, providing a robust foundation for growth-oriented investors seeking long-term capital appreciation. The allocation reflects an intent to capitalize on different market dynamics, enhancing the portfolio's resilience against economic fluctuations.

Growth Info

Historically, this portfolio has delivered impressive returns, with a compound annual growth rate (CAGR) of 16.04%. However, it also experienced a maximum drawdown of -31.79%, indicating potential volatility during market downturns. The high returns are primarily driven by the significant exposure to the S&P 500 and the technology sector. This performance highlights the potential for substantial growth but also underscores the importance of being prepared for market fluctuations. Investors should weigh these factors when considering the portfolio's suitability for their financial goals and risk tolerance.

Projection Info

Using a Monte Carlo simulation, which models potential future portfolio outcomes, we assume a hypothetical initial investment to project returns. The simulation suggests a wide range of possible outcomes, with the 5th percentile projecting a modest return of 100.92% and the 67th percentile indicating a substantial gain of 1,062.95%. With 995 simulations showing positive returns, the portfolio demonstrates a strong likelihood of achieving gains over time. This forward-looking analysis provides confidence in the portfolio's ability to deliver long-term growth, albeit with inherent uncertainties typical of market investments.

Asset classes Info

  • Stocks
    90%
  • Other
    10%

The portfolio is primarily composed of stocks, accounting for 89.63% of the total allocation, with a small portion in other assets, including gold, and a negligible amount in cash. This heavy stock allocation aligns with a growth-oriented strategy, aiming to maximize capital appreciation over time. While this approach can yield significant returns, it also exposes the portfolio to greater volatility. Investors should consider their risk tolerance and investment horizon when evaluating this allocation, as it may require a longer-term commitment to weather market fluctuations and achieve desired outcomes.

Sectors Info

  • Technology
    30%
  • Financials
    13%
  • Consumer Discretionary
    9%
  • Industrials
    9%
  • Health Care
    8%
  • Telecommunications
    6%
  • Consumer Staples
    5%
  • Energy
    4%
  • Basic Materials
    3%
  • Utilities
    2%
  • Real Estate
    2%

Sector allocation is diverse, with a notable emphasis on technology (29.74%) and financial services (13.49%). This distribution reflects a strategic focus on sectors with high growth potential. The inclusion of consumer cyclicals, industrials, and healthcare further diversifies the portfolio, providing exposure to various economic cycles. However, the significant weight in technology may lead to increased volatility. Investors should monitor sector performance and consider rebalancing if necessary to maintain alignment with their risk tolerance and investment objectives, ensuring a balanced approach to sector exposure.

Regions Info

  • North America
    71%
  • Europe Developed
    8%
  • Asia Emerging
    3%
  • Japan
    3%
  • Asia Developed
    2%
  • Australasia
    1%
  • Africa/Middle East
    1%
  • Latin America
    1%

Geographically, the portfolio is heavily weighted towards North America, comprising 70.96% of the allocation. This concentration reflects a focus on the U.S. market, known for its stability and growth potential. While this provides a solid foundation, the portfolio also includes exposure to developed Europe, emerging Asia, and other regions, enhancing diversification. This geographic spread helps mitigate risks associated with regional economic downturns. Investors should consider their comfort level with this geographic focus and assess whether additional diversification across regions could further optimize the portfolio's risk-return profile.

Redundant positions Info

  • Technology Select Sector SPDR® Fund
    Vanguard S&P 500 ETF
    High correlation

The portfolio exhibits some asset correlation, particularly between the Technology Select Sector SPDR Fund and the Vanguard S&P 500 ETF. This correlation suggests that these assets may move in tandem, potentially amplifying volatility during market swings. While correlated assets can enhance returns in favorable conditions, they may also increase risk during downturns. Investors should be aware of these dynamics and consider diversifying across less-correlated assets if seeking to reduce overall portfolio risk. This approach can help achieve a more stable performance across different market environments.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

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Given the portfolio's current composition, optimizing might not be necessary due to overlapping, highly correlated assets. Instead, focus on maintaining diversification and adjusting allocations along the efficient frontier to suit risk preferences. A more conservative portfolio could involve increasing exposure to less volatile assets, while a riskier one might emphasize high-growth sectors. Prioritize evaluating existing allocations and their alignment with financial goals before making significant changes. This strategic approach ensures that any adjustments enhance the portfolio's overall risk-return profile without unnecessary complexity.

Dividends Info

  • Avantis® U.S. Small Cap Value ETF 1.50%
  • Vanguard S&P 500 ETF 1.20%
  • Vanguard Total International Stock Index Fund ETF Shares 3.00%
  • Technology Select Sector SPDR® Fund 0.70%
  • Weighted yield (per year) 1.42%

The portfolio's dividend yield stands at 1.42%, with contributions from various ETFs. The Vanguard Total International Stock Index Fund ETF Shares offers the highest yield at 3.0%, providing a steady income stream. While the yield is modest, it adds a layer of stability, particularly during volatile market periods. Investors seeking income should consider this yield in the context of their broader financial goals. Balancing growth and income can be a strategic move, ensuring the portfolio meets both capital appreciation and cash flow needs over time.

Ongoing product costs Info

  • Avantis® U.S. Small Cap Value ETF 0.25%
  • SPDR Gold MiniShares 0.10%
  • Vanguard S&P 500 ETF 0.03%
  • Vanguard Total International Stock Index Fund ETF Shares 0.08%
  • Technology Select Sector SPDR® Fund 0.09%
  • Weighted costs total (per year) 0.08%

The portfolio's total expense ratio (TER) is 0.08%, reflecting a cost-efficient approach. With low-cost ETFs like the Vanguard S&P 500 ETF at 0.03%, the portfolio minimizes expenses, maximizing net returns. This low-cost structure is advantageous for long-term investors, as it reduces the drag on performance. Investors should continue to monitor costs, as even small fee reductions can significantly impact overall returns over time. Maintaining a focus on cost efficiency ensures that the portfolio remains aligned with best practices for optimizing investment performance.

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